The Record industry.. RIP

Fewer new releases are reaching one million units in sales, a very small number of them even get to 5,000 units and maintaining early sales momentum is increasingly difficult. Those were the lessons learned from Nielsen’s presentation at last month’s NARM conference in Chicago. Some of the highlights from the presentation:

12 Albums Released in 2009 Sold More than One Million Units
Of the 97,751 albums released in 2009, only 12 of them sold more than one million units last year, according to Nielsen SoundScan. The number of titles to reach one million units in previous years was 35 in 2006, 27 in 2008 and 22 in 2009.

The new releases that do sell over one million units in the year of their release, however, are maintaining their average. Between 2006 and 2009, the average annual tally for titles reaching the one million mark has ranged from a low of 1.42 million in 2008 to a high of 1.61 million in 2009. In years past, there were far more titles in the one million to 1.4 million range. Now such titles would probably not reach the one million mark and as a result would not be included in these calculations. So, the average of the titles in this million-plus ground stays about the same even though there are fewer sales and less revenue from these million-plus sellers.

A side note: Albums routinely sell well after their year of release. In the case of Taylor Swift, her 2006 debut sold over one million units in both 2007 and 2008 after selling less than 300,000 units in the year it was released. Zac Brown Band’s The Foundation, released in 2008, sold over one million units in 2009. And Michael Jackson’s catalog sold millions in 2009 but was not counted in these figures.

Only 771 of 2009’s New Albums Sold Over 5,000 Units
The numbers are enough to make you stop and think. Only 2.1% of the 97,751 albums released in 2009 – or about 2,050 unique titles – reached a threshold most people would assume is within reach of just about any artist.

The Number of New Albums Actually Dropped in 2009
If 97,751 new releases seems high, consider it’s actually a lower number than the 105,000 new releases that came out in 2008. Expect the number of new releases to hold steady or decline in the coming years. In recent years, digital distributors flooded online retail with foreign catalogs being licensed to new territories. In effect, these distributors are catching up to all the music that’s available from around the world. As with most games of catch up, this one won’t go on forever. As fewer and fewer old recordings find their way to U.S. retailers for the first time, the unique number of titles released in a given year will fall. There may be an increase in the number of domestic recordings, but it may not be enough to make up for the fall in new foreign catalogs.

Albums’ Second-Week Fade Are Getting Bigger
The median second-week fade was 62.8% in 2009 and had steadily dropped each year from 33.9% in 2000. Nielsen’s explanations are good ones: marketing budgets are more limited, pre-sales are more common, core fans are more aware of new releases, piracy may be eroding sales of casual fans.

These are the results of the last decade’s shift from physical to digital sales. Internet sales – both physical and digital – mean a greater percentage of total sales will come from pre-orders that SoundScan counts as first-week sales.

Here are a few other thoughts. Because radio plays less of a role in album sales, few albums get the lasting benefits of radio promotion that helps sales after the initial push. And because there are fewer marketing dollars being spent at physical retail, there are fewer titles enrolled in price-and-placement programs that used to position a sale-priced CD for the first two or four weeks of release.

These factors combine to create a retail environment in which it is easier to get core fans’ attention but difficult to market beyond those core fans.
(via billboard)